PARIS: As President Donald Trump’s trade war weighs on the global economy, the “best option” is for countries to negotiate and get a deal done, the OECD’s chief economist told AFP.
The fallout from Trump’s tariff onslaught prompted the Organisation for Economic Cooperation and Development to paint a gloomy picture in its economic outlook published on Tuesday.
The OECD cuts its global growth forecast to 2.9 percent for this year and 2026, down from 3.3 percent last year. The Paris-based organisation had previously forecast 3.1 percent growth for this year.
“We basically downgraded almost every single economy of the world,“ OECD chief economist Alvaro Pereira said in an interview.
“It doesn’t matter if you’re a G20 country, if you’re a small country, small or non-G20,“ he said.
He said trade, consumption and investment had been affected by the tariffs.
The OECD, a 38-nation grouping of mostly developed countries, is holding a ministerial meeting in Paris on Tuesday and Wednesday.
US and EU trade negotiators are expected to meet on the sidelines of the gathering, while the Group of Seven advanced economies is due to hold separate talks on trade.
Trump hit imports from almost every countries in the world with a 10 percent baseline tariff in April, plus 25 percent duties on the steel, aluminium and car sectors.
He also unveiled steeper tariffs on dozens of countries but has paused them until July to give space for negotiations.
Pereira warned that the world economy could suffer more if countries retaliated against the US tariffs.
“For everyone, including United States, the best option is that countries sit down and get an agreement,“ Pereira said.
“We think that keeping markets open, decreasing trade barriers, it’s going to be absolutely essential,“ he said, adding that everyone would be “better off”.
- ‘Less positive’ for US -
While Trump believes his trade war will boost the US economy, the OECD slashed its forecast for US growth to 1.6 percent -- down from 2.2 percent in its previous outlook and the biggest revision among wealthy nations.
“Of course, the United States is the country that is going to have biggest repercussions in terms of not only growth impacts from tariffs, but also on inflationary pressures,“ said Pereira, a former Portuguese economy minister.
“All this trade uncertainty and policy uncertainty is having an impact on consumer confidence in the United States coming down and business confidence,“ he said.
“So this is why we are less positive about the United States.”
